News / Record-breaking year for Russia's Fesco triggers new rail links with China

Russian transport operator Fesco ramped up container throughput in 2018, recording surging financials and record-breaking volumes for the year.

Following the 18% upturn in container volumes, it has announced a cooperation agreement with Russian Export Center (REC) and Rail Cargo Logistics, to boost links between Siberia and China.

The agreement will focus on containerised shipments from Novosibirsk and Krasnoyarsk to China, via railway overland border crossings and the port of Vladivostok.

Rail Cargo and Fesco will work on setting routes, providing equipment and access, with REC focused on promoting services and attracting shippers.

Fesco president Alexander Isurin said the strategy fitted the company’s expansion plans.

“Last year, we launched regular trains from Krasnoyarsk to Chengdu and Xi’an through Kazakhstan and Mongolia,” he added. “We expect cooperation with REC and Rail Cargo Logistics will contribute to optimisation of logistics schemes and increase the volume of containerised cargo transport.”

The last 12 months proved prosperous for Fesco, handling 10.4m tonnes, the highest in its history, while intermodal volumes grew 23.9% to 301,800 teu.

This strong volume growth equated to vastly improved financials, revenue surging 30.3% to RUB57bn ($878m) in turn generating profits of RUB10.6bn, up 36%.

The company said: “All divisions contributed to the consolidated ebitda growth, with effective commercial policies and higher cargo traffic being the key drivers.”

However, it was the rail division that steamed ahead, in terms of growth rates, with revenue up 44% and profit rising 36%.

Its port business followed closely, with income up 39.5% and profitability climbing just under 31%, while logistics revenue jumped 22.4%, providing a 45.1% bounce in profits.

Improving connectivity between Russia and China appears to remain a key part of the company’s growth strategy.

“After developing expedited Shanghai-Moscow multimodal services in 2017, we expanded to include Busan to Moscow and St Petersburg and from Japan’s ports to Moscow,” it said.

Development of services into China appears key for Russia’s economy as a whole, with the new cooperation agreement geared towards this. Director of Rail Cargo Logistics Alexander Baskakov described development of Russian exports as “the most important task” for the Russian economy.

“I am sure cooperation with Fesco and REC will enable us to increase the volume of Russian exports and reduce the import-export imbalance,” said Mr Baskakov.

“The main product exported from Siberia to China is timber but launching new services will allow us to enlarge the range of non-primary goods.”